Analysts at Deutsche Bank slightly raised their target price on software firm Playtech from 602.0p to 607.0p on Monday after the group delivered a “strong” first-half performance and a “positive assessment” of short and medium-term prospects.
Deutsche Bank said revenues were up by 73% at Playtech to €792.3m but noted that this had been flattered by “easy comparisons” in the prior year due to Covid-driven retail closures.
However, the German bank also highlighted that revenues were 66% above 2020’s first half, excluding the group’s discontinued Finalto unit.
Underlying earnings of €203.8m were “modestly below” estimates of €205.6m, but this was said to be entirely due to a bad debt provision of €15.4m.
“Management sees H1 momentum continuing into H2, driving modest upgrades to our FY22 forecasts,” highlighted DB, which stood by its ‘buy’ rating on the stock.
Deutsche added that Playtech shares currently trade on a full-year 2023 enterprise value/underlying earnings ratio of just 4.6x, and at a 38% discount to Aristocrat’s 680.0p bid, which was rejected in February.
“We see upside from a potential break-up of the business, or resumption of bid interest, in due course,” added the analysts.
Reporting by Iain Gilbert at Sharecast.com
